According to analysts, if the Fed keeps interest rates unchanged in the first quarter of 2026, Bitcoin could face a sharp correction.
Jeff Mei, COO of BTSE, predicts that in this scenario, Bitcoin could fall to $70,000 and Ethereum to $2,400.
According to Mei, even if the FED ended its quantitative tightening (QT) process as of December 1, 2025 and launched its Reserve Management Purchase Program (RMP) covering short-term Treasury bills, the measures to be taken on the interest rate side will be decisive for the markets. This program, which involves monthly purchases of approximately $40 billion, is considered by some analysts to be “covert quantitative leasing (hidden QE).”
Jeff Mei said that if the RMP program continues until the first quarter of 2026, it could provide net liquidity to markets and support risky assets. In this scenario, Mei predicted that Bitcoin could reach the $92,000-$98,000 range, while Ethereum could reach $3,600 with layer 2 scaling developments and a revival of the DeFi ecosystem. According to the analyst, ETF inflows exceeding $50 billion and institutional accumulation could also support this rise.
Mei noted that the Fed had tried to strike a delicate balance between a weak labor market and persistent inflation over the past year, recalling that three consecutive interest rate cuts brought the policy rate back to the range of 3.50 to 3.75 percent. However, she said hawkish messaging at the December meeting caught markets off guard and led to massive sell-offs in Bitcoin and Ethereum.
According to Mei, the FOMC meetings in January (28-29), March (18-19), and May (6-7) will be “decisive” for the crypto market. The analyst noted that the Fed is being cautious about lowering interest rates because inflation is still above its 2% target, but added that it could continue to inject liquidity into the system through alternative tools such as Treasury purchases.
In the most likely scenario, the Fed could implement a one-time 25 basis point interest rate cut at its January meeting and then wait until March. In this scenario, Bitcoin is expected to reach the $92,000-$98,000 range, while Ethereum is expected to approach $3,600. Analysts believe patient investors could benefit from a gradual buying strategy in this environment.
It is suggested that the Fed could implement two more interest rate cuts by June if there is a significant weakening of the labor market or if inflation falls below 2%. In this scenario, Bitcoin could surpass $125,000, while Ethereum could climb as high as $4,800 thanks to spot ETFs, increasing total value locked (TVL), and tokenization of real-world assets. A 25-35% increase in the total market capitalization of cryptocurrencies, to $4 trillion, is also among the possibilities.
If inflation becomes persistent and the Fed does not cut interest rates in the first quarter of 2026, market conditions could reverse. In this scenario, Bitcoin could fall to $70,000 and Ethereum to $2,400. Analysts suggest that in such an environment, investors could increase their stablecoin holdings, looking for buying opportunities at lower levels.
*This does not constitute investment advice.
